More on Cash for Caulkers

Leonhardt mentions, in passing, the best part about the cash for caulkers program, but misses its significance: most people wouldn't get around to doing it without government subsidies. As such -- unlike the case for clunkers program -- a cash for caulkers program is not merely time-shifting investment that would have occurred anyway at a later date (and thus sets up a later drop-off), but would stimulate economic activity that would otherwise never occur.

Of course, as other commenters note, pricing carbon -- either through cap-and-trade or a tax -- would get a lot of people interested in weatherizing their homes without requiring a specific government program to help them do it.

Sometimes these blogs by twenty-something bloggers who live in apartment buildings get tiresome. Homeowners already have big heating bills and are motivated or not by them to the degree they are sensitive to spending money.

Well, Ezra may be a twenty-something blogger, but I'm a long ways from that. Nor do I live in an apartment; in fact, I'm working on the purchase of my 8th house.
And while I'm certainly sensitive to spending money, I'm also sensitive to having the government kick in towards capital improvements. Large chunks (arguably too large) of our tax system are based on such sensitivity.

On the question of whether increasing the price of energy will get people to do the economically rational thing, see this interesting BusinessWeek blog post from yesterday:

"...Markets respond to pricing, sometimes. McKinsey and Company has developed what has become a very well known analysis called a "Cost Abatement Curve" for reducing Greenhouse gas emissions. The curve shows that many greenhouse gas reducing technologies are cost effective today. Most of these technologies are within the construction industry - insulation, lighting, water heating, etc. And yet, many of these technologies remain unadopted.

Why is that? Well, of all industries, the construction is one of the slowest to change. Inertia rules the day - particularly in the small and fragmented home building sector - as the way we've done things becomes the way we will do things. And even if a contractor decided to take the risk of installing something new and unfamiliar (such as greywater systems) he or she would face the risk of a bank refusing a loan on "unproven" technology, the building inspector balking at its novelty or the customer requesting a callback if it doesn't work.

And that assumes that the customer knows enough to even want it. Whirlpool once considered taking the Energy Star label off its washers because consumers thought that if it used less water and less energy it must not clean as well. Today, the company still finds consumers who will balk at buying the super efficient washers at as much as a $700 price premium even though an average family of four can get that money back in less than 2 years in some parts of the country...."

I guess we just need someone with a gun at our backs to march us on a Great Leap Forward to the promised land then. I wonder if Anita Dunn has any suggestions on how to fight that battle...

Greywater plumbing is against "the law" in many places. And municipal systems, run by local governments, are the biggest wasters of water. Building inspectors are "the law" in most places.

--"insulation, lighting, water heating"--

All the builders I've seen the last few, and I've seen a range, insulate like crazy. They may leave the pipes for the owner to do, but that's small potatoes. Lighting is still driven by customer preference and tech advancement. Despite all the hoopla, many of the new fluorescents can't be put into recessed boxes, and that's where a lot of people want them. And I don't think their cost savings are proven. Water heating faces similar problems. On-demand units are expensive (even with the tax credits) and can require additionally expensive retrofits (that's why my new water heater is a traditional one, even though I could have afforded the fancy unit itself, and installed it myself, etc). Geothermal and solar won't work everywhere (the former out of space of geologic considerations) and the latter requires some sort of backup.

Or local governments can do some special loans for caulkers. This would imitate what a good handful of cities are starting to do for house solar panels. Solar panels, like weatherization projects, are good for the families that own the homes because the save money. They also each happen to be good for the environment. There is a large upfront cost, unfortunately. And even if the money is there for that upfront cost, the family might not live in the house long enough for the savings to equal the cost. Same with both solar panels and weatherization projects.

With solar panels, many cities are beginning to loan the families money to put solar panels on their property. Though I don't think the loan is directly to the owners, exactly, so much as to the property. Paying back the loan would be done through a line item on property taxes for some amount less than the savings over X amount of years. If the owners sell the house, they pass on both the cost and savings to the next owners.

Years ago, I watched a TV feature about building energy efficient homes. It happened to be on a popular German children's program (Die Sendung mit der Maus). The frustrating part is that I have yet to meet an American whose knowledge of the matter reaches the level that a German 10 year old would have after watching that program. Sorry if this sounds condescending but it's a fact. Most people here, including HVAC specialists, have never heard of a heat recovery ventilation system. The American energy efficiency deficit is a huge issue that persists on many levels. For decades, nobody - not the government, not businesses, not consumers - has paid any attention to it. As a result, Americans are energy illiterates. It will take a lot of effort to change this.

If you really want to encourage energy savings (and consumer awareness of energy consumption), do what's been done here in California. Raise the cost of energy! Yep, that's the real reason that we're so energy efficient out here. It's just too expensive to be an energy hog. We're locked into high rate contracts signed by our local governments during the height of the so-called energy crisis at the start of the decade. Now that the utility companies know that folks will pay those high rates, there's no going back.

Of course, it's not good for what's left of our manufacturing base here in the state..

At first glance, the “Cash for Caukers” proposal sounds good, but that doesn't mean it will translate into long-term savings. To put it bluntly, spilling $23 billion into the market to any guy with a pickup truck and a caulk gun might create jobs, but it is unlikely to produce meaningful and measurable results.

For years, utilities and governmental entities have tried energy efficiency measures for 20-30 years, but rarely have they achieved lasting results.

Homeowners put in CLFs, but remove them shortly thereafter; many people don’t take care of their heating systems. Others install programmable thermostats, but four out of five people improperly program them, rendering in a higher net energy use. Some homeowners use their energy savings to buy a new big TV or other energy hog, only to take them back where they started.

Energy efficiency can and does work on a large scale. It requires skill in training and delivery, expert selection of measures, and many other little annoying details. The trick is to identify and implement a few choice measures that result in real change that lasts.

One company that has achieved meaningful results on a large scale is EnerPath, based in Southern CA-based (http://www.enerpath.com/)Over the past 20 years, EnerPath has replaced 250,000 clunker appliances and implemented “Caulker”-like solutions to improve the energy efficiency of more than 100,000 homes and small businesses. EnerPath has an adoption rate for recommended measures of 85%, and a 99% customer satisfaction rating.

Successful large-scale energy efficiency programs demand an airtight and innovative process for managing the delivery of energy efficiency at scale. Otherwise, it’s like spitting in the wind; you don’t know where it will end up.